Global boards are justifiably concerned and confused about China right now. For most companies, their Chinese operations are still going well and represent a major contributor to global sales and profits. However, the risks seem to be multiplying and the sense of insecurity deepening.
The combination of the geopolitics, the impact of China’s zero covid policy on the economy, and zealous domestic politics has many boards asking how the country should fit into their future strategies. This has been compounded by the travel restrictions of the past 2 years, with the lack of visits to and from China impeding the development of understanding and trust between HQ and China teams during these changing times.
In this article, we present our read of the risk factors and their implications for international companies operating in China. We argue why, in our view, cautious positivity is warranted. And we conclude by offering multinational HQs our seven tips for operating in China today. These include incorporating geopolitics into the decision-making process, assessing how to de-risk your China balance sheet, the importance of scenario planning, managing the growing HQ-China Gap, taking good care of expatriate and local executives in China, and the importance of taking advantage of the new wave of positive policies to retain MNC by local and national officials.